THE road to criminal asset seizure is fraught with loopholes and legal controversy, as the Bulgarian Government may find if it implements Interior Minister Georgi Petkanov's draft bill on the confiscation of illegal gains.

We all get a kick from the thought of a mafia-boss' gold toilet, black BMW and tacky villa being grabbed in a raid, but should also remember from the bad old days just what increasing the powers of the police to such an extent can mean for human rights.

Last week Petkanov presented his bill at a round table discussion proposing the confiscation of property acquired over the past 12 years if the owner could not verify its legal origin.The law would apply to all suspicious transactions over 30 000 leva made after January 1, 1990, and members of the owners' family, as well as third parties that may have benefited, will also be required to declare the status of their property. The existing Penal Code makes third persons immune to criminal justice, which criminals have put to good use by assigning property to friends or family members to prevent confiscation.

However, Petkanov assured that ownership rights of third parties proved to have acquired the assets in good will from the person investigated would be guaranteed.

The bill provides a clear procedure for illegal asset seizure, stating that it must be launched on the initiative of the district prosecutor or following a tip-off by special bodies in the Interior or Finance Ministry.

The Bulgarian Socialist Party (BSP) embraced the bill, while the centre-right opposition Union of Democratic Forces (UDF) declared it unconstitutional, and it is now a hot political and public debate. UDF deputy leader Vladimir Kisyov said that different wings of the ruling National Movement Simeon II (NMSII) had contradictory ideas on property confiscation and capital amnesty.

NMSII refused to comment officially on the bill before it is approved by the Government and filed in Parliament. Business people said illegally acquired property should be confiscated only after court judgment. But this is the same judicial system that the Government is declaring inefficient and avoiding responsibility in dealing with suspicious money.



The Irish solution



In drafting the bill, Petkanov said the experience of the US, Switzerland, Ireland and the Netherlands has been tapped, and this week experts from the Republic of Ireland were called in to discuss the draft. The island has a massive drug problem due in part to the difficulty of patrolling its lonely coasts.

From the Irish perspective a primary danger is that people falling under the jurisdiction of Bulgaria's prepared Property of Criminal Origin Alienation Act will have a year to prove their innocence, in which time a criminal could find false evidence or flee the country or a law-abiding citizen's business be destroyed. This concern was acknowledged by Petkanov after his meeting with the director of the Irish Criminal Assets Bureau (CAB), Felix McKenna and solicitor of the unit Barry Galvin. The Irish experts therefore argued for a quick civil procedure, which would punish the culprits and defend the rights of honest people.

In general, Ireland's asset seizure experience has been a success.

"From the very first month after the enforcement of the law in July 1996, the bureau initiated six large-scale checks," McKenna said.

"Ever since then over 100 confiscations of property valued at over 40 million euro have been made and as much as 30 million euro in capital have been blocked. Only three tried to prove the legal origin of their money, but failed in their attempt."

There is also the little matter of the European Court of Human Rights (EHCR), which recognises that any such system could be open to abuse and can therefore decide to overturn criminal confiscation that it deems to be punitive in character, rather than reparative.

Since the enforcement of the law in Ireland, however, there has been only one case filed with the EHCR, which was won by the state. There has been no check against a politician to date, however, an issue that should rings bells in Bulgaria as it has in Ireland.

The Irish Proceeds of Crime Act was enacted in 1996 following a number of drug-related gangland murders including that of a prominent crime reporter and a police officer. Under the act, investigation and a later evaluation by the civil courts takes place to determine the amount by which a person has benefited from criminal activity and deprive him of that profit, even if there has been no conviction after a trial or guilty plea been made. The court is only required to be satisfied that there are "reasonable grounds" for suspicion.

Guilty until proven innocent



Much more criticism has been directed at the draconian confiscation laws of the US.

Though there is some variation from state to state, laws drafted under the Reagan administration in 1978 and 1984 permit forfeiture of all money used in, or acquired from, the illegal drug trade as well as real property. Forfeited property, or the proceeds of its sale, has been turned over to law enforcement and or offered at public auctions - if the buyer doesn't mind a few bloodstains or bullet holes.

Critics such as New York white-collar criminal lawyer Steve L Kessler maintain that allowing law enforcement agencies to keep the proceeds of their forfeitures "creates an overwhelming financial incentive for abuse, one that would tempt even the most honest cop."

As in Ireland, there is no need for a conviction before seizure or forfeiture, and the property owner does not even have to be charged with a crime.

"Since the property is guilty of the criminal activity, the legal fiction goes, the property is being seized and punished," said Kessler, "no individual is being prosecuted. Therefore, fundamental constitutional protections such as the presumption of innocence, having the government convict you of the charge instead of you proving your innocence, and the right to be free from unjust private property takings by the government quite simply do not apply."

In the US, the seizure of property is big business. Between 1985 and 1996 alone, the federal government collected more than $5 billion in forfeited proceeds, said Kessler, and, in short, forfeiture laws have permitted the government to become a "full financial partner and participant in what is unquestionably the largest business in the country."

An economist from the Urban Policy Research Institute said the forfeiture process went on simply because many claimants did not have the resources to challenge federal authorities, with the result that seizing agencies retaining seized property even if an investigation revealed the property involved was not associated with crime.

Fortunately, however, the American solution would be unpalatable to any European, so is not likely to impact on the Bulgarian bill. But heed should be taken of the slap Greece got by the EHCR when it tried to apply criminal asset seizure to those accused of terrorist activities, which was ultimately declared unconstitutional.

Also notable is the lack of success the UK has had in its criminal confiscation regime, which originated in the 1950s when such powers were aimed at nabbing articles deemed offensive to public morality such as pornography.

As in the US, amounts recovered under most forfeiture orders can be awarded by the courts to the law enforcement agency that investigated the offence, which critics say risks skewing police activity away from the far more powerful provisions of the confiscation law.

Data on the level of confiscation and enforcement in the UK has not been collected in any systematic way, and what little exists shows that, despite legislation that provides for confiscation upon conviction for all crimes, the country's track record is poor. Overall, the amount collected under the confiscation regime is very small by comparison with estimates made by the National Criminal Intelligence Service (NCIS), which say the amount of criminally derived funds in circulation of 2 per cent of GDP, or approximately 18 billion pounds). Ministers have long been concerned that previous attempts to step up the seizure of criminal assets have foundered in Britain on a reluctance by judges to use the powers.

New powers now make it mandatory for judges to order the seizure of the ill-gotten gains of drug traffickers and other convicted criminals but have set a date of doubling their recovery target to 60 million pounds - by 2204.